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Definitions and Background on Orphan Drugs and Rare Diseases

Orphan drugs are pharmaceutical agents developed specifically to treat a rare medical condition. In the United States, an orphan drug is defined as a drug that treats a disease that affects less than 200,000 individuals, or less than 5 per 10,000 people in a community. Orphan drug status is becoming more common due to research efforts in oncology. Orphan drugs are developed in response to public health need.

Ultra-Orphan drugs are intended for the treatment, prevention, or diagnosis of ultra-rare diseases, i.e., life threatening or chronically debilitating diseases that affect less than one per 50,000 individuals.

Definition of Orphan and Ultra-Orphan Disease

U.S. Code Title 21 §360bb, defines an orphan disease as a condition that affects fewer than 200,000 people nationwide or a disease that affects more than 200,000 in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales in the United States of such drug. 1

Ultra-Orphan diseases are extremely rare conditions, although not legally defined it is generally accepted that an ultra-orphan disease affects less than 20,000 people nationwide. The National Institutes of Health (NIH) estimates there are nearly 7,000 rare diseases affecting an estimated 25 million to 30 million Americans. 2

The Orphan Drug Act

The small number of individuals having a particular rare disease presents obstacles to the development of a drug for that disease. The passage of the Orphan Drug Act (ODA) in January 1983, addressed the obstacles of the cost of development and limited patients for clinical trials.

ODA was designed to encourage pharmaceutical companies to develop drugs for diseases that have a small market and to provide equitable access to therapies regardless of the incidence of the disease. In other words, the ODA seeks to provide those with rare diseases life-changing treatment that the market otherwise would not provide.

Under the ODA, companies that develop a drug designated as an orphan drug may receive certain benefits such as a tax credit of 50 percent of clinical testing costs, the exclusive right to market the drug for seven years and research grants. 3

The ODA gave the U.S. Food and Drug Administration (FDA) the authority to review and approve requests for orphan drug status. By all accounts, the ODA has been a success with the FDA reporting that more than 400 drugs and biologics for rare diseases have come to market since enactment of the ODA. In comparison, less than 10 drugs and biologics for rare diseases came to market in the 10-years prior to the ODA.

A study presented at the recent American Society of Hematology (ASH) annual meeting found that as a consequence of the ODA, "orphan drug development was stimulated and therapies have been developed to treat a variety of previously underserved conditions including acute myeloid leukemia, chronic lymphocytic leukemia, multiple myeloma, myelodysplastic syndromes, Gaucher disease and Hunter syndrome." 4

Subsequent to the ODA in the U.S., Orphan Drug Legislation was adopted by Singapore in 1991, Japan in 1993, and Australia in 1997. In 1999, the European Parliament adopted Regulation on Orphan drugs. The EU regulation provides protocol assistance, 10-year marketing exclusivity and financial support for research and development.

Regulatory Development Process for Orphan Drugs

In general, orphan drugs follow the same path to approval as non-orphan drugs however certain considerations are given to encourage the development of orphan drugs. Congressional legislation including the Food and Drug Administration Modernization Act in 1997 and, the Food and Drug Administration Safety and Innovation Act in 2012, allows the FDA to tailor the design and review the pathway for each drug based on the disease and patients the drug is intended to treat, and factors including whether the drug treats a rare disease or addresses an unmet need as well as any previous knowledge the FDA has of the drug.

Because orphan drugs treat rare diseases, it is challenging to accrue patients to clinical trials for these drugs. Current regulatory and approval pathways for orphan drugs take this into account. In 2012, an orphan drug for Gaucher disease was approved based on two trials with fifty-six patients. However, while the Orphan drug laws facilitate accelerated approval they do not provide for a lesser degree of evidence for safety or efficacy.

FDA Commissioner Dr. Margaret A. Hamburg addressed the AMA's recent study, Clinical Trial Evidence Supporting FDA Approval of Novel Therapeutic Agents, 2005-2012 that was published in the January 2014, Journal of the American Medical Association (JAMA), and in which one of the authors stated, "Not all FDA approvals are created equally." Dr. Hamburg said rather than viewing this as a criticism it demonstrates the FDA's flexibility, under the accelerated approval process, to bring novel drugs to market for patients for whom no good alternative treatment exists. 5

Orphan Drug Pricing

Pharmaceutical companies incur significant expense on development of drugs that fail to make it to market, and these costs as well as the increasing cost of drug development and marketing of drugs that become approved must be recovered along with a profit if the company is to stay in business.

Cancer is the largest disease category for orphan drug development and the other top disease categories include genetic disorders, infectious diseases, neurological disorders, respiratory diseases and autoimmune disorders. Orphan drugs are addressing a wide variety of rare diseases including Cushing disease, Gaucher disease and cystic fibrosis.

The first drug to treat the underlying cause of cystic fibrosis was developed and approved by the U.S. Food and Drug Administration in 2012, after just three months of review. The drug was first approved to treat a small subset (about 4%) of cystic fibrosis patients who have a particular genetic mutation, and at the time, it was one of the most expensive prescription medicines in the U.S. 6

Orphan drug pricing is a controversial issue. Orphan drugs tend to have higher prices, reflecting the drug development costs and the small patient population. Because the orphan drug will only treat a limited number of people the cost of the drug per patient will be higher than a drug used to treat tens of thousands of patients.

In the past five years there have been 144 orphan drug approvals and the median orphan drug cost is reported to have increased from $50,342 in 2010, to $98,534 in 2014, while the top ten most expensive orphan drugs have an annual cost range of $200,000 - $409,500. 7

And yet, as reported in the recent study presented at the 2014 ASH Annual Meeting (and illustrated in Figure 1), the annual cost of orphan drugs as a percentage of total drug spend has remained fairly stable with the total spend on orphan drugs rising only 2% since 2010. 8

Figure 1: Proportion of Total US Drug Expenditures, 2007-2013: Orphan and Non-Orphan Drugs

How Do We Continue to Learn About Rare Diseases?

Patient registries and databases gathered by rare disease advocacy groups and academic based scientists provide a means to create a network of experts in rare diseases and to supply crucial information for developing clinical research trials.

Patient registries can demonstrate the course of disease, the variations in current treatment and outcomes. These registries are particularly valuable sources of information for very rare diseases when clinical trials may not be realistic due to extremely low patient populations.

The majority of patient registries and databases are disease specific and they may be researcher-generated or launched and supported by disease advocacy organizations. Rare disease registries launched by advocacy groups may be "patient-powered" meaning that patients and family members are key contributors and are involved in all or most aspects of the registry.

The National Organization for Rare Disorders (NORD), a non-profit federation of more than 130 non-profit organizations serving people with rare diseases, and the Von Hippel Lindau (VHL) Alliance, with the support of the FDA, developed a web-based registry platform through which rare disease patient organizations can collect and manage research-grade, longitudinal, patient-reported outcome data. And in March 2014, the VHL patient registry was launched on the platform. 9

Dr. Janet Woodcock, director of FDA's Center for Drug Evaluation and Research (CDER) recently wrote of the importance of compiling data on the natural history of rare diseases and the FDA's commitment to support and encourage the use of natural history data collections tools. 10

The number of patient registries for rare diseases is rapidly increasing, and both researcher-generated and patient-powered registries are working to identify common data elements (CDEs) and standardize data collection in order to facilitate data sharing.

The National Institutes of Health (NIH)/National Center for Advancing Translational Sciences (NCATS) maintains the Global Rare Diseases Patient Registry Data Repository (GRDRSM) a program designed to advance research for rare diseases through a Web-based program that aggregates, secures and stores patient information from multiple registries for rare diseases. The aggregated data may be used by scientists to conduct analyses across diseases and may result in opportunities for research collaborations and clinical trials.

Identifying patients with rare diseases through health information systems is complicated by the lack of common nomenclature. The majority of rare diseases are not included in the current ICD-9, ICD-10 or the Systematized Nomenclature of Medicine (SNOMED), when this is the case the coder must choose the code(s) that most appropriately represent the disease.  This makes it nearly impossible to identify and follow patients with rare diseases in health information systems and contributes to the lack of data about rare diseases on a national and international level.

Orphanet, a European website, is contributing in collaboration with the World Health Organization (WHO) to the International Classification of Diseases (ICD) revision process to incorporate all rare diseases into the ICD-11 which is scheduled to be launched in 2017. In the meantime, Orphanet has developed an in-house nomenclature specific to rare disease whereby each rare disease has a unique identifier called an Orpha code. As of March 2014, France, Germany, Hungary, and Belgium have decided to include Orpha codes for rare diseases in their health information systems. Spain has decided to use Orpha codes to an extent in their national rare disease registry. 11

Orphan Drug Issues and Complexities

Rare diseases usually have poor outcomes including disability or death. Patients with a rare disease may go years before being accurately diagnosed as the rarity of the disease leads to a lack of awareness by physicians and missed diagnoses. Additionally, symptoms may be "non-specific," meaning they are not signs of a specific disease, or are unusual leading the physician to assign a diagnosis that best fits the symptoms. Patients may have to wait a considerable amount of time to see a specialist and are often shifted from one specialist to another without a definite diagnosis. Orphan diseases often have high mortality rates and patients may die in-patient from complications of their disease. 

Many patients with orphan diseases are not able to work or attend school due to the disease, may be homeless and are often uninsured. Many times there is no one advocating for the patient with an orphan disease as they go from specialist to specialist (GI- FP-Hematologist- Neurologist- Cardiologist- ER) trying to get an answer. Many patients are labeled as drug seekers because they show up in the ER with pain complaints. In addition, a lack of coordinated care for these patients leads to many unnecessary tests with too few answers.

During the time their condition is undiagnosed, many rare disease patients are hospitalized with non-specific symptoms. Due to the rarity of an orphan disease and lack of awareness of the symptoms of the rare disease by Hospitalists, Intensivists, Critical Care Specialists or other members of the inpatient care team, the patient may not be tested for it. In addition, the testing for a rare disease may be done in specialty labs with which the hospital is not contracted and therefore hospital staff is not familiar with the available test. There is also a lot of pressure on the treating physician to stabilize the patient and get them discharged, thus further impeding a correct diagnosis.

Once diagnosed with a rare disease, patients are further challenged by a lack of treatment options, and due to the rarity of the disease, when a treatment is available the physician may not be aware of it. Additionally, the high cost of the orphan drug may create a barrier to access.

Patients with rare diseases must often see specialists that are "out of network" and therefore the costs may not be covered by their health plan or count towards the out-of-pocket limits established by the Affordable Care Act (ACA).

Orphan Drug Coverage

In a recent study by the Tufts Center for the Study of Drug Development (CSDD), Dr. Cohen reports increased payer scrutiny of orphan drugs. The study found that there are relatively few absolute denials of coverage for orphan drugs in the U.S. or Europe.

However, in the U.S., 84% of orphan products have conditions of reimbursement such as prior authorization, quantity limits, and/or step therapy. The study also reveals that patient cost-sharing is much higher in the U.S. with average coinsurance for physician-administered drugs at 20% and for outpatient drugs at 31%.

In contrast, in Europe only 37% of orphan drugs have conditions of reimbursement, but the conditions are more rigorous including indication restrictions and coverage with evidence development (CED) that may limit coverage to a subset of the approved indications. Nevertheless, the average copayment for orphan drugs in Europe is between $2 and $15 per prescription whether the drugs are physician-administered or outpatient drugs. 12

According to the CSDD study, the UK health authority formally evaluated 25% of orphan drugs, the health authorities in France and the Netherlands formally evaluated 50% and the German health authority formally evaluated 5%. And while U.S. payers do not systematically conduct a health technology assessment (HTA) on orphan drugs, they have indicated that they intend to conduct more HTA evaluations in the future.

In the European Union (EU), the Committee for Medicinal Products for Human Use (CHMP) conducts the initial assessment of medicines for which a EU-wide marketing authorization is sought as well as the assessment of modifications or extensions to an existing marketing authorization. These assessments are based on scientific criteria in order to ensure that the medicines have a positive risk-benefit balance for patients. 13

While the CED process in Europe often limits coverage to a subset of the drugs indication, the process also provides a means to generate improved clinical evidence to support coverage determinations and patients may be allowed rapid access to new treatments while additional information is gathered to inform coverage decisions. 14

Oftentimes, for orphan drugs this data is gathered from patient registries. For example, CHMP's initial approval for the only drug approved to treat Paroxysmal Nocturnal Hemoglobinuria (PNH), an ultra rare life-threatening disease, was limited to those PNH patients with a history of transfusions. 15 And, in April 2015, the EC approved an updated label for the drug after efficacy and safety data from an observational, non-interventional international PNH Registry, confirmed that patients with no history of transfusion who were treated with the drug had a significant reduction in haemolysis (measured by LDH) and clinical symptoms associated with high disease activity in PNH. 16

Site of Service

As stated earlier, patients with rare and ultra rare diseases are often only diagnosed after admission to the hospital with acute symptoms. In these cases, when a treatment exists the first few treatments may be administered inpatient. For the patient diagnosed inpatient in the hospital, the higher cost for orphan drugs may cause hospital administration (CEO, Hospital Director, and Pharmacy Director) to deny treatment as these drugs come out of the Diagnosis Related Group (DRG) payment.

Under the DRG payment methodology the hospital is paid a set rate based on the average resources used to treat Medicare patients in that DRG, 17 this payment methodology is designed to encourage hospitals to operate efficiently. Private payers and state Medicaid programs also commonly use the DRG system. However, because the drugs administered inpatient are included in the DRG and not paid separately, the hospital may choose to only offer supportive care to manage the symptoms of the rare disease, in an effort to keep the cost of treatment down.

Understanding that the DRG payment system could limit timely access to expensive new technologies and treatments, the Centers for Medicare and Medicaid Services (CMS) implemented the New Technology Add-On Payment (NTAP) Policy in 2001. Under the NTAP, a new technology will be an appropriate candidate for an additional payment when it represents an advance in medical technology that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. 18 Another method used to ensure that access to care is not jeopardized is to "carve out" the cost of certain treatments and services from the DRG and make them separately payable.

Hospital departments generally operate under separate budgets, and the Pharmacy Director may initially focus only on the impact to the pharmacy budget when an expensive drug is prescribed. But it is important that the total cost of caring for the patient be taken into account. In other words, what would the total cost to the hospital be if the patient is not provided the drug and must instead receive other inpatient treatment modalities?

As an example, in the case of the orphan drug used to treat aHUS, the number of doses given in the hospital is generally two before the patient is released and transferred to outpatient status so the impact on the DRG is not tremendous and results in fewer hospitalizations and reduced disabilities.

However, special care must be taken to ensure a smooth transition to the outpatient site of service. If a patient receives the first dose in the hospital, they may require immediate insurance verification and be subjected to prior authorization by insurance upon outpatient treatment starting or most physicians will not provide care or drugs. A Hospital Discharge Planner (financial counselor/social worker/ company assistance provider) will be key to the discharge planning process. Patients are often discharged before these support systems are in place and have missed doses due to lack of coverage upon discharge. Compounding the problem, due to the long-term devastating & chronic nature of these diseases patients may have poor support systems at home and may be lost to follow up.

A recent study of claims data shows the cost of care to the payer and patient is often much lower in the physician office than in the hospital outpatient department. As an example, in PNH, there was only one member taking the orphan drug per every 750,000 lives, or 0.015 patients per 10,000 members. With an average of 73 units per claim and 26 infusions per person annually, the annual cost of treatment at a physician's office was nearly half the cost for infusion at a hospital outpatient department. Significant savings to the payer and patient would therefore be realized if the patient was infused in a physician's office.19

The Impact of the 340B Program on Hospital Outpatient Drug Costs

There are significant benefits when a patient previously treated in the hospital is subsequently released and treatment continues in a 340B hospital outpatient setting. In the outpatient setting the drug is separately covered and paid at ASP+6%. Furthermore, if the hospital is a 340B entity the outpatient drug may be purchased at the discounted 340B price.

The 340B program became effective in 1992. Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to taxpayer-supported health care facilities that care for uninsured and low-income people. Discounts to covered entities on outpatient drugs range from 25% to 50%, and the stated goal of the 340B program is to allow covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. 20

The passage of the Affordable Care Act (ACA) on March 23, 2010, and the Unemployment Compensation Extension Act on May 28, 2010, expanded the scope of the 340B drug discount program to include more patients and health care facilities. With the passage of the ACA, 340B now includes the following health care facilities:

  • Critical Access hospitals
  • Free standing cancer hospitals
  • Rural Referral centers
  • Sole Community hospitals
  • Additional children's hospitals, not-for-profit, and owned or operated by a unit of state or local government

Sections 516 and 517 of the ACA further expand the 340B program to cover inpatient drugs for individuals with no insurance or prescription drug coverage, and also allows for the coverage of orphan drugs for rare diseases that were previously excluded from coverage.

The final rule, Exclusion of Orphan Drugs for Certain Covered Entities Under 340B Program, released by the Department of Health and Human Services (DHHS), outlines the application of the program in regard to orphan drugs. The final rule holds that only the specific rare-disease use of the drug will be excluded from the discount program, discounts will apply to non-orphan uses of the drug. This rule was created in an effort to protect the financial incentives for manufacturing orphan drugs and maintain the 340B savings for covered entities. 21

Nonetheless, some manufacturers of orphan drugs are voluntarily participating in the 340B program for the rare-disease use of the drug in order to ensure that patients have access to the necessary treatment.

Insurance issues:

Self-insured health insurance plans differ from commercial health insurance plans. Under a self-insured plan the employer funds medical expenses and contracts with a third-party administrator (TPA) to provide administrative services and to process medical claims.

Under the self-insured plan, the employer assumes the financial risk of providing health care benefits to its employees. Employers may decide to self-insure their health plans for a number of reasons such as retaining control over plan design and reserves, and eliminating insurance commissions and insurer profits and other costs.  There may also be disadvantages associated with self-insuring, such as a greater assumption of risk and increased administrative obligations.

With self-insured plans, the desire to keep costs down may result in pressure to not get proper treatment and many of the ACA's reforms do not apply to these plans. In addition, the self-funded employer may choose to transfer some or all of its risk of loss by purchasing private secondary insurance called stop-loss insurance.

A stop-loss policy, also called reinsurance or risk control insurance, is an insurance policy that protects the purchaser, such as the self-funded employer, from losing too much money from one insured's high dollar claims or the total amount of claims paid in a year. Stop-loss policies vary in their scope and coverage, but in general the policy defines an attachment point for individual high cost claims and an aggregate attachment point to protect against the cumulative impact of smaller claims. When the attachment point thresholds are reached the stop-loss policy covers the remaining costs for the year, though policy limits and coverage varies by policy.

The ACA prohibits self-funded employer health plans from discriminating based on health status or imposing annual or lifetime limits on essential health benefits.  However, stop-loss policies are not held to the same rules as health plans.  Stop-loss plans often employ "lasering," this is the practice of assigning different attachment points or deductibles, or denying coverage altogether, for an employee or dependent based on the health status of that individual. 22

In addition, prior to the ACA most health plans had a lifetime spending maximum of $1 million to $2 million. Healthy individuals rarely hit the lifetime cap, but a patient with a rare disease could reach a $1 million dollar cap rather quickly. For these patients and their families the prohibition of annual and lifetime benefit limits, as well as the protections barring insurers from charging more or dropping coverage for pre-existing conditions has been very impactful.

These changes have also necessitated changes by the payers. Payers want predictability in their financial liability. Payers who can no longer impose limits on annual or lifetime benefits, or deny or charge different premium rates to patients with pre-existing conditions have had to adapt their calculations based on this new model. The ACA addresses this with three interdependent programs to help protect insurers against unpredictable losses or unmanageable risk selection. According to the Commonwealth Fund, these programs are in fact working.

In the ACA's Marketplace, the Risk Adjustment, Reinsurance and Risk Corridors programs are intended to encourage insurers to compete based on the value and efficiency of their plans rather than by attracting healthier enrollees. The Risk Adjustment program redistributes funds from plans with lower-risk enrollees to plans with higher-risk enrollees, the Reinsurance program provides payment to plans that enroll higher-cost individuals, and the Risk Corridors program limits losses and gains beyond an allowable range. Figure 2, describes the programs and the basic characteristics of each program.

The Risk Adjustment program is a permanent program that redistributes funds from marketplace plans with healthier than average customers to marketplace plans with sicker than average customers. The intended result of the Risk Adjustment program is to deter insurance companies from seeking to attract healthy enrollees by redistributing funds from companies with healthier than average customers to plans with sicker than average customers. 23

Figure 2: Explaining Health Care Reform: Risk Adjustment, Reinsurance, and Risk Corridors Kaiser Family Foundation 24

Patient Access

Patient access to orphan drugs remains challenging as payers may focus only on the high cost of therapy. However, the very small number of patients within each payer's plan may not create a significant impact as compared to high volume drugs such as cholesterol drugs or diabetes patients. As an example, the cost of lipid lowering drugs or other high-volume treatments are more impactful on a payer's budget.

The Tufts Center for the Study of Drug Development, examined payer coverage of outpatient orphan drugs in the United States, England and Wales, and the Netherlands. The results of the study showed that orphan drugs have more coverage restrictions than non-orphan drugs.

The study found that when there are multiple orphan drug options payers in the United States are differentiating between the orphan drugs by granting preferred formulary status to certain drugs and not to others.

The authors state that health authorities may be responding to price independent of other factors, such as budget impact, and fears that growth in orphan drug expenditures will be unsustainable in the long run may not be justified, in part due to their limited budget impact.

Nonetheless, the study reports that the Dutch Health Care Insurance Board (CVZ) placed a number of orphan drugs on its 'special list' of 'expensive' medications, with an earmarked budget. The authors' state that this follows a trend in Europe, to counteract the possibility of non-coverage of certain orphan drugs a number of health authorities have allocated earmarked resources to the pharmaceutical treatment of certain rare diseases to ensure patient access.

The study concluded that payers should consider the same set of decision criteria for orphan drugs as they do for non-orphan drugs: disease severity, availability of treatment alternatives, level of unmet medical need, and cost-effectiveness. 25

The recent evaluation process in the UK for the orphan drug for aHUS took into account the "significant innovation" and "gains of a magnitude rarely seen in any new drug treatment." Following the National Institute for Health and Care Excellence (NICE) recommendation for the drug, the National Health Service (NHS) officials agreed that the cost of the drug per patient each year was a good value as the drug offers patients living with the ultra-rare, life threatening disease "an extra 25 years of good quality life." 26

Patient Support

Oftentimes, patients with rare diseases are able to obtain financial assistance to help with the cost of treatment through pharmaceutical support programs, orphan disease foundations or other patient assistance organizations.

These organizations include:

  • The National Organization of Rare Disorders (NORD) Disease Specific Assistance Programs are designed to help patients with out-of-pocket costs associated with their insurance plans such as monthly premiums, deductibles, co-payments and co-insurance. 27

  • Global Genes™ a patient advocacy organization that promotes the needs of the rare disease community. 28

  • Orphanet a reference portal for information on rare diseases and orphan drugs. 29


Many orphan drugs reduce morbidity and mortality by substantial percentages. Often the untreated patients die at a very young age or are unable to care for their families or go to school and they do not lead productive lives.  In other words, the treatments are not just modestly better than another drug or better than no treatment; they reduce mortality and morbidity and lead to quality of life enhancements.

Supportive measures (transfusions, pain meds, dialysis, etc.) are often used to treat the symptoms even though they are not studied in the treatment of the disease and thus often lead to wasted resources with no proven efficacy. As an example, one therapeutic modality used for critically ill patients is plasma exchange or plasma infusion which has been estimated to cost >$4,000 per exchange and patients often receive multiple exchanges prior to receiving appropriate treatment. 

In addition to being expensive, plasma exchange poses significant patient risks. Complications include hypocalcemia, hypovolemia, hypotension, allergic and anaphylactoid reaction, transfusion-related acute lung injury, and infection. 30


To summarize, patients with rare diseases are challenged with the proper diagnosis of their disease, the limited options available to treat it, and the fact that where life-changing treatment does exist, there may remain barriers to access.

The Orphan Drug Act has resulted in life-saving therapies for many rare diseases. In the future, we can expect to see the number of orphan drug approvals grow and many of these drugs will benefit from the FDA's Breakthrough Therapy (BT) Designation, 31 which when granted expedites the development and review of the drug. 

While many of these drugs are expensive, a recent study shows that the total spend on orphan drugs has only increased by 2% since 2010. Nevertheless, access to these drugs may still be problematic in certain settings. Furthermore, while regulatory processes have been adapted to encourage the development of drugs to treat rare diseases, the current reimbursement policies for orphan drugs may effectively limit the use of these drugs.

The development of precision medicine and a more complex understanding of diseases through advances in technology and genomics may result in the use of orphan drugs for another rare (or even more common) disease resulting in a reduced cost and hastened drug development.  However, there needs to be a more open-minded approach to a different way of performing clinical trials to obtain quick and robust results.

As we move to a health care environment that is increasingly focusing on the value of services (defined as a ratio of costs to benefits), questions as to how to value a treatment for which there is no alternative must be addressed. Is the current method of health technology assessment (HTA) appropriate for orphan drugs? Should the severity of the disease, and the availability of other therapies to treat the disease be taken into account? Is the burden of the disease on the patient and society factored in the analysis? And what role does societal preferences for the treatment of life-threatening rare diseases have in the development, funding and use of orphan drugs?

1 U.S. Government Publishing Office. 21 U.S.C. 360BB - Designation Of Drugs For Rare Diseases Or Condition. Accessed March 1, 2015.

2 NIH U.S. National Library of Medicine. Accessed March 1, 2015.

3 Food and Drug Administration, Orphan Drug Act. Accessed March 1, 2015.

4 The Budget Impact of Orphan Drugs in the U.S.: A 2007-2013 MIDAS Sales Data Analysis. Accessed April 27, 2015.

5 Margaret A. Hamburg, M.D., Why FDA Supports a Flexible Approach to Drug Development, FDA Voice, February 6, 2014. Accessed March 1, 2015.

6 U.S. Food and Drug Administration News and Events. FDA approves Kalydeco to treat rare form of cystic fibrosis. Accessed January 25, 2015.

7 EvaluatePharma Orphan Drug Report 2014. Accessed April 27, 2015.

8 The Budget Impact of Orphan Drugs in the U.S.: A 2007-2013

9 NORD Registry Platform.

10 The more we know about rare diseases, the more likely we are to find safe and effective treatments, Janet Woodcock, M.D., FDA Voice

11 EUCERD Joint Action Workshop on Orpha codes in Health Information Systems, Workshop Report, Paris, March 18, 2014.

12 Cohen JP. Tufts CSDD analysis.

13 European Medicines Agency, Committee for Medicinal Products for Human Use (CHMP). Accessed April 2015.


15 European Medicines Agency, Scientific Discussion. Accessed April 2015.

16 Business Wire. Accessed April 2015.

17 Centers for Medicare and Medicaid Services, Acute Inpatient PPS. Accessed February 2015.

18 New Medical Services and New Technologies, Centers for Medicare & Medicaid Services.

19 AISHealth. Focus on Site of Care Can Boost Patient Outcomes, Payer Savings. Accessed February 6, 2015.

20 Health Resources and Services Administration. 340B Drug Pricing Program. Accessed February 25, 2015.

21 Federal Register. Exclusion of Orphan Drugs for Certain Covered Entities Under 340B Program. Accessed March 4, 2015.

22 National Association of Insurance Commissioners (NAIC). White Paper Stop Loss Insurance, Self-funding and the ACA. Accessed April 2015.

23 The Commonwealth Fund. The Three R's of Health Insurance. Accessed April 2015.

24 The Henry J. Kaiser Family Foundation. Explaining Health Care Reform: Risk Adjustment, Reinsurance, and Risk Corridors. Accessed April 20, 2020.

25 Tufts Center for the Study of Drug Development. Are payers treating orphan drugs differently? Accessed February 24, 2015.

26 Daily Mail.

27 NORD Registry Platform. Accessed March 27, 2015.                      

28 Global Genes. Accessed March 27, 2015. 

29 Orphanet. Accessed March 27, 2015.

30 Use of the ADAMTS13 Activity Assay Improved the Accuracy and Efficiency of the Diagnosis and Treatment of Suspected Acquired Thrombotic Thrombocytopenic Purpura. Archives of Pathology & Laboratory Medicine. Accessed April 27, 2015.

31 FDA Fact Sheet: Breakthrough Therapies. Accessed May 18, 2015.

Oplinc, would like to express gratitude to Sibel Blau, M.D.,
who generously shared her time, insight and expertise in the review of this paper.
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